Friday, August 12, 2011, 07:15 pm PT (10:15 pm ET)
Leaked AT&T filing shows full LTE coverage would cost additional $3.8BAccording to an accidentally leaked letter from AT&T, the company estimates that expanding 4G LTE coverage from its original plan of 80 percent of the population to 97 percent of Americans would cost $3.8 billion.
The partially redacted letter appeared briefly on the Federal Communications Commission website on Friday before being taken down, as reported by Wireless Week. AT&T reportedly indicated in the letter, which was posted by the company's law firm, that carrying through on its pledge to provide LTE service to 55 million rural Americans would require $3.8 billion in additional capital expenditures.
Executives from both T-Mobile and AT&T have touted expanded 4G coverage as one of the key consumer benefits to the $39 billion merger. According to the letter, the deal would help AT&T to better absorb the increased capital investment and lower returns associated with deploying LTE to over 97 percent of the U.S. population.
Providing coverage to the extra 17 percent of the population would require nearly tripling the land mass covered by the network. AT&T's original plan reached 80 percent of the U.S. with just 20 percent of the country's land mass, but providing LTE to 97 percent of Americans would require covering 55 percent of the land mass in the U.S.
According to the ex parte document, AT&T plans to upgrade 44,000 nodes to LTE over the next two years: 8,000 nodes this year, 16,000 nodes next year and 20,000 nodes in 2013. Providing the additional coverage as promised reportedly involves 18,000 cell sites.
AT&T has moved up its plans for LTE deployment by a year and plans to have the network "largely complete" by the end of 2013. The company plans to reach 70 million customers with 4G service by the end of this year.
Meanwhile, rival Verizon has almost a year-long head start with LTE. The carrier launched its 4G network in 38 markets, covering 110 million people, last December. It plans to reach nationwide coverage by 2013.
AT&T responded to the leak by claiming that any confidential information contained within agrees with the company's prior statements.
There is no real news here, said spokeswoman Margaret Boles. The confidential information in the latest letter is fully consistent with AT&Ts prior filings. It demonstrates the significance of our commitment to build out 4G LTE mobile broadband to 97% of the population following our merger with T-Mobile. Without this merger, AT&T could not make this expanded commitment. This merger will unleash billions of dollars in badly needed investment, creating many thousands of well-paying jobs that are vitally needed given our weakened economy.
However, the letter has been taken by some to be damaging to AT&T's argument that its proposed acquisition of T-Mobile is vital to its expansion to rural markets. Critics have questioned why a $3.8 billion expansion requires an acquisition more than ten times the size.
For its part, competing carrier Sprint has cast doubt on AT&T's claim that the T-Mobile merger would help provide LTE coverage to 97 percent of U.S. residents. "We do not believe this merger facilitates that goal, but even if it did — at what cost? Is it worth removing a competitor?" Sprint CEO Dan Hesse said during a Senate hearing in May.
AT&T announced its deal with T-Mobile in March. Antitrust reviews of the merger are expected to take about a year. The carrier has reportedly hired bankers to help facilitate the possible sale of assets should it be required to divest customers or spectrum to win regulatory approval.
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